Hutchison/Port of Barcelona

Briefing:

Hutchison Port Holdings, the global parent operator of the

Semiautonomous B.E.S.T. Port of Barcelona

 

Presented to:

Dr. Joan Ball, Ph.D.

Dr. Daniel Rubin, Ph.D.

 

The Peter J. Tobin College of Business

 

Global Destination Course – Barcelona

Service Marketing Research

 

 

Prepared by:

Kahina Bessai & CJ Martin

 

St. John’s University

 

Contents

  1. Introduction
  2. History of the Port
  3. Ownership Structure
  4. Global Presence and Distribution
  5. Product Portfolio
  6. Target Market
  7. Competitors
  8. Current Marketing/Branding
  9. Sources

 

Introduction

This document has been prepared to provide background information for the St. John’s Global Destination Course students as a part of the cultural and economic learning process in Barcelona, Spain. In conjunction with the site visit to the B.E.S.T. port, this document analyzes the history and development of the port as it has become the technologically advanced and efficient mover of goods that it is today. It is evident that this development of the port has enabled the economy of the region to grow over time, by providing east of access to global trading lines through the Mediterranean. Hutchison Port Holdings has contributed as the global corporate power that has taken the B.E.S.T. semi-autonomous port to the next level through both financial investment and synergy between its global network of ports. This connection between global ports is beneficial for the reason that technological advancements can be implemented on larger scales, and was evident throughout our research and site visit.

 

History of the Port

Barcelona began as a settlement by the sea, and as the city grew it became important to the inhabitants to utilize its water access as a port. Despite sand conditions that made building a dock difficult, the citizens battled to build a working port over time. Popular exports during Roman times were stone, fish paste and wine. The port saw increased development during the late 1400s using the resources of the Spanish Empire.

Due to the instability caused by the World Wars (I and II), the port’s traffic came to a virtual standstill starting during the 1920s. Around 1960, expansion of the port began again. In 1978, the port took on the title of “Autonomous Port of Barcelona”. This change made the port remain a government body while also functioning as a commercial enterprise subject to private law. In  1992, the ports returned to state management when the Barcelona Port Authority was created. The Port Authority developed strategic plans for the growth and development of the port over time, including plans for private contracting of port operation.

The Hutchison Port Company began as the Hong Kong and Whampoa Dock Company, which specialized in ship construction and repair. The company grew and developed over time to control an international network of ports, that became Hongkong International Terminals Limited (Hutchison Ports HIT) in 1969. After more international growth, the company changed again to be known as Hutchison Port Holdings Limited.

In 2006, Hutchison Port Holdings won the contract (with partner Grupo Mestre) for the construct and operation of the Barcelona container terminal. The port saw expansive development over the years following, implementing modern technology. In 2012, the semi-autonomous port was named Barcelona Europe South Terminal (abbreviated as ”BEST”). The port’s design and operations were effective and praised by customers and users, leading to its system being implemented in other Hutchison ports around the world.

On December 15, 2017, Hutchison Ports BEST terminal in Barcelona recently reached a landmark of its millionth container moved.

 

Ownership Structure

When Hutchison won the tender to take over operations in the barcelona port in 2006, part of the agreement included a partnership with the local Spanish company Grupo Mestre. The reasons for this partnership seemed to relate to the political popularity that would come as a result. Hutchison was the foreign power that was coming into a position that where it would begin receiving dollars earned that would have gone to the Spanish Port Authority, had their been no change in business structure. Perhaps even more concerning for Spanish citizens was unemployment potential. A foreign corporation like Hutchison naturally does not have any significant interest in the job economy of any nation, even its native country- because that is not within the mission of the organization. Tying the Spanish company, Grupo Mestre, to the management of the port operations would ensure that the local citizens would be employed and their overall interests would be considered. 

 

Global Presence & Distribution

In addition to running the Barcelona Port, Hutchison Port Holdings operates 48 ports in 26 countries around the world. The company has ports on all 6 continents, with none in Antarctica. The global operations is headquartered out of Hong Kong. The Port of Barcelona operates more than 48.6 million tons of cargo, 2.2 million TEU’s, 705,000 vehicles, 8,728 vessels and almost 4 million passengers a year.

The Port of Barcelona contains the most terminals, and the best cruise ship terminals. Each cruise can carry up to an impressive amount of 6,000 passengers. Barcelona free trade zones are all located within a 5 km radius of the port. Together these infrastructures form the main logistics for the mediterranean. They have doubled its surface area and are expanding every year at an expediated pace. BEST is the first semi automatic terminal in the Mediterranean and it will increase the total capacity to 5 million containers per year. The port for logistics has increased by triple the amount than the original. Investment of over 4 billion euros in both public and private funds have been aided to the port of barcelona to increase traffic and keep up with competitors. They are always looking for new innovative ways to improve their system to get things done efficiently. They are seeking to improve their land transport connection including expanding their market to other European markets.

Barcelona was the first port in Spain to be connected to Europe by railways. They are hoping that their new methods of transportation will help them expand to Asia and North America which is their ultimate goal because this will lead to the greatest prospect for growth.

Product Portfolio

The Port of Barcelona does not produce physical products, but rather provides the service of moving and storing containers of goods that are going to/from Barcelona. The port can facilitate shipment via railway, maritime, and road. In addition to maintaining efficient flow of containers, Hutchison also conducts inspections on the containers that enter its domain. Logistics and warehousing services for containers also produce revenue for the company.

 

Target Market

The Port of Barcelona’s target market is for buyers and sellers which makes it “the main gateway of entry of goods in the European market.” The Port of Barcelona makes it possible for North and Central America, Northern Europe, Northern Africa, the middle and far east to have easier access to trade goods. Supermarkets, retail, foreign labor would also be target markets for the Port of Barcelona. Supermarkets will be able to import everything from fish, rice, to meat. Retailers can have their merchandise shipped and this provides foreigners with jobs as well because they have to bring the goods to the port.

During our trip to the Hutchinson Port today, our host explained to us who uses their facilities and how they are implemented. She used examples like Inditex and Amazon. Inditex owns numerous Spanish clothing brands that are international hits like Zara, Mango, and Bershka. When we are online shopping, as consumers we never stop to think, “wow this is going to be traveling from several companies before it gets to me.” Rather, instead we complain about how it takes 5-7 business days to reach us because we chose the free shipping option at checkout.

 

Competitors

Hutchinson’s competitors include other shipping companies/ports:

SA International is one of the world’s largest port operators. They were founded in Singapore and are also headquartered in Singapore. According to the Global PSA, they are known as, “The world’s port call.” They provide port and marine services. According to Bloomberg,  “It offers container handling, multi-purpose terminals operation, and other port related services. The company also provides warehousing and logistics related services, as well as consultancy services on port management, port operations, and information technology. It operates in Southeast Asia, Europe and Mediterranean, Northeast Asia, and internationally.” 

China Ocean Shipping (Group) Company also known as COSCO. They are China’s largest well known for their global shipping, repairs, ship building and mordernized logistics. Cosco owns and controls over 800 merchant vessels. COSCO’s shipping lines are located in 1,600 ports in more than 160 countries and regions worldwide with their fleet size ranks the first in China and the second in the world.

APM Terminals Management B.V. is an international terminal operating company that is located in the Netherlands. APM is also known for being the world’s largest port and terminal operators. APM also provides cargo support and container services.

DP World Limited also operates marine and inland services along with logistics to “technology driven trade solutions.”

 

Current Marketing/Branding

Hutchison Ports has information available online through their website, www.hutchisonports.com. This website features details about Hutchison’s global operations, and some lists of the company’s achievements. The purpose of the site seems to be to establish the brand of the port and give recognition for the innovation that can be seen within Hutchison’s shipping operations. Additionally, since the port is an employment provider, the site features a career section with job info and listings.

There is also a site for the Barcelona B.E.S.T. port specifically, describing what services are available in Barcelona among other info.

 

 


SOURCES

http://www.hoovers.com/company-information/cs/competition.hutchison_port_holdings_limited.77999a211fe90163.html

http://www.portdebarcelona.cat/en/web/port-del-ciudada/29

https://hutchisonports.com/en/about-us/company-profile/

http://www.seatrade-maritime.com/news/europe/hutchison-best-terminal-in-barcelona-passes-1m-container-move-mark-in-2017.html

http://www.best.com.es/en/rail-services/

http://www.portdebarcelona.cat/en/web/port-del-ciudada/29

https://hutchisonports.com/en/about-us/company-profile/

http://www.seatrade-maritime.com/news/europe/hutchison-best-terminal-in-barcelona-passes-1m-container-move-mark-in-2017.html